Amid US and Palestinian anger over Israel expansion plans in East Jerusalem, Prime Minister Benjamin Netanyahu is facing mounting skepticism on peace talks from Palestinians and splits within his ruling coalition.

ByIlene R. Prusher, Staff writerMarch 28, 2010

Israel's Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting in Jerusalem, Sunday. Trying to tamp down tensions with the U.S. in his first comments since meeting President Barack Obama last week, Israeli Prime Minister Benjamin Netanyahu says Israel and the U.S. are "allies and friends" and can work out their differences.

The Israeli premier's meetings last week with US President Barack Obamalooked like such a failure for Mr. Netanyahu that the left-leaning Haaretz on Sunday declared Israel to be "deep in the abyss." The more right-leaning, mass circulation Yediot Ahronoth on Sunday quoted a member of Netanyahu's inner cabinet, known as the "forum of seven," as saying that the "situation is catastrophic." The source blamed the Obama administration's "hostility" towards the Israeli government and said that Obama was had turned out to be a "strategic disaster" for the US-Israel relationship.

Alongside the diplomatic woes that have strained ties with Israel's closest ally, there is an air of rebellion in the ranks, as more pro-peace members of Netanyahu's government – the Oslo Accord-pioneering Labor party is a member of his coalition – are musing aloud about breaking up the constellation of governing political parties to make way for a new team more committed to Israeli-Palestinian peace.

If that weren't enough, there's been an upsurge of violence in and around the Gaza Strip, bringing into question the sustainability of the cease-fire between Israel and Hamas that marked an indecisive end to their devastating war 14 months ago.

In Sirte, Libya, where the Arab League was meeting, Palestinian President Mahmoud Abbas was being urged by hard-line Arab states – Syria and Libya in particular - to withdraw from the US-sponsored peace process and resume violence against Israel, according to the Associated Press. The AP quoted two delegates who spoke on condition of anonymity "because of the sensitivity of the issue.

Among more mainstream voices, Arab League chief Amr Moussa urged countries to consider finding a new strategy for dealing with Israel in light of fading peace hopes, saying that their offer of peace could not be “an open-ended process." He also asked Arab states to foster a dialogue with Iran, a tilt sure to be upsetting to Israeli leaders.

Problems?

At his weekly cabinet meeting Sunday, Netanyahu tried to downplay concerns over the troubled US-Israel relationship, and even addressed the Yediot article as not having represented reality.

"Regarding the issues that came up [in Netanyahu's meetings with Obama], there were areas in which there was full agreement, as well as those where there was disagreement. We took various steps to reduce the gaps in order to advance the process. We are continuing these efforts," Netanyahu said.

"I have recently heard anonymous, unworthy remarks in the media regarding the American administration and the American president. I would like to make it clear: I find these remarks to be unacceptable. They are from nobody acting on my behalf. Relations between Israel and the US are those between allies and friends and reflect longstanding tradition. Even when there are differences of opinion, they are differences of opinion among friends and will remain so."

Obama had requested written guarantees in order to clarify what precisely Netanyahu was promising in the form of "confidence-building measures" that would aim to enable a resumption of peace talks with the Palestinians. The Obama administration expected an answer by the weekend, it was widely reported. But a Netanyahu spokesman said Sunday he was "not aware of any deadline" and that internal discussions were continuing.

While the focus of the Israeli-Palestinian standoff has tended in recent weeks to be Jerusalem, where Israel announced plans to move forward with controversial building projects in or near Arab neighborhoods of East Jerusalem, tensions around Gaza have begun to resurface. On Friday, an IDF [Israel Defense Forces] unit made an incursion into Gaza to stop what it said was a group of Palestinian militants laying mines. The ensuing clash resulted in the deaths of two IDF soldiers and one Palestinian militant. Although several Palestinian groups claimed responsibility, Hamas seemed to have been the primary group involved and lauded the event as a successful ambush.

Either way, several Israeli observers reacted to the news with predictions that the current situation was untenable, and that perhaps an "Operation Cast Lead II" would be forthcoming. Avi Dichter, a former director of the Shin Bet (Israel's internal security service) and a member of Knesset in the centrist Kadima party – now in the opposition – complained that recent talks in Washington were focused completely on Jerusalem and the West Bank, leaving Gaza out of the equation.

"Hamas is raising its very problematic head, is re-arming and re-grouping, and something will need to be done about that," Mr. Dichter said in an interview Sunday on Israel Radio. "Either the Arab world will have to help us do it, or Israel is going to have it do it. I don't think we should take one event and build a new policy out of it. But this international recipe of dealing with the West Bank and Jerusalem, and not to deal at all with Gaza, is a recipe for failure."

Ahmed Yousef, the senior political adviser to Ismail Haniyeh, the prime minister of the Hamas government in Gaza, said Israel was provoking the breakdown of the ceasefire by building in Jerusalem and by the incursion it made on Friday.

"It is the Israelis who crossed the line by getting inside Gaza. They actually crossed our border, which is more then trespassing," says Dr. Yousef. "It's almost an invitation for us to intervene. As we see it, that's what's happening in Jerusalem as well. They are trying to agitate Muslims the way they are acting in East Jerusalem, pushing us towards a religious war. What's happening in Jerusalem is unacceptable. We here in Gaza are being asked to do something to respond. The whole Arab world is asking us to do something."